How Much Risk Is Right for You?

How Much Risk Is Right for You?

After peaking in April at 11,205, the Dow Jones Industrial Average plunged below 9,800 in June — low enough to ignite talk of a bear-market signal. Even though past performance does not indicate future results, that recent retreat is serving to reignite the fears of investors who moved out of equities during the worst of the downturn — and who have shied away from investment risk ever since. Some view today's high unemployment and a skyrocketing U.S. budget deficit as threats to the strength of the American economy and wonder whether the recovery will have legs. Others point to the market's advances and retreats over the last year and question whether investing in stocks is worth the anxiety and effort involved.

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The Bond That Loves Inflation

The Bond That Loves Inflation

Even a relatively minor jump in prices can take a major bite out of the income from the conservative yields of U.S. Treasury bonds, the foundation of so many investor portfolios. But the income and long-term return from one type of Treasury, called Treasury inflation-protected securities, or TIPS, actually improves as the consumer price index rises.

Last year, when the federal government poured money into the economy and inflation fears swirled, TIPS became a focus for investors looking for a hedge against rising consumer prices. As a result, yields on these securities were driven down to low levels — and particularly as worries about inflation subsided, TIPS began to appear less attractive.

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Is Your Portfolio Paying Enough Dividends?

Is Your Portfolio Paying Enough Dividends?

Most of the news about dividend-paying stocks during the first half of the year focused on the oil spill in the Gulf of Mexico. When BP suspended its dividend to brace itself for the costs and responsibility associated with one of the worst environmental disasters in U.S. history, investors were reminded again of the importance of maintaining a diversified investment strategy.

Behind the headlines, though, a more upbeat dividend-paying story has quietly been unfolding — this group of stocks as a whole has emerged as something of a hedge against recent market volatility.

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